Edit Content

Brazilian Economy Shrink By 0.2% In First Quarter. Analysts Say It’s Closer To Dip Recession.

Brazilian Economy

Brazilian Institute of Geography and statistics or IBGE, the country’s statistics agency, said its gross domestic product (GDP) shrank by 0.2% from the preceding quarter compared to the 0.5% GDP growth from a year earlier, which is in line with forecasts by economists. Brazilian economy, the largest in Latin America, constricted in the first quarter of 2019, for the first time since 2016.  Data revealed on Thursday, that the nation is pushing nearer to a double-dip slump.

After Five Recessions In 20 Years, Indices Points To Technical Recession.

The shrinkage heaped pressure on President Jair Bolsonaro, who in January resumed office after making market-friendly promises to enhance growth and lift the despair hanging over the economy since a brutal recession experienced between 2015 to 2016.

Start Your Business in 30 Days Even If You Don't Have An Idea
Start Your Business in 30 Days Even If You Don’t Have An Idea

Though, the data obtained were in line with forecasts, the economy stays weak.  The leading pointers from April and May, such as bank lending, consumer confidence, and export data, as well suggest the economy is still in a sulk.

According to Isabela Guarino, chief economist at XP Asset Management in Sao Paulo, who forecast growth of just 0.1% for the April to June quarter, “The signs so far in the second quarter are that the economy is not recovering.”

But there is a very real risk of contraction, which would take the country into a technical recession. It’s not our base case, but it’s a rising risk,” she added.

According to Alberto Ramos at Goldman Sachs, the Brazilian economy has been in recession five times in the past 20 years. The last time was 2015-16, one of the worst experienced in the nation’s history. The recovery since then is the weakest on record.

The Market Reactions To The Available Data.

Brazilian markets exhibited little reaction to the data. The Bovespa stock market was up 0.4% in early trade, the most solidly traded interest rate futures contracts over the next year were flat to slightly higher, while the real (the country’s currency) was steady at R$3.9770 to a dollar. However, the exchange has risen and rate expectations in recent days, have sharply fallen.

Reports From The Brazilian Central Bank.

The Brazilian apex bank’s weekly survey of around 100 financial institution revealed that the average guesstimate for 2019 GDP growth has dropped for 13 weeks consecutively and now stands at 1.2%, from the 2.5% at the beginning of the year.

Also, A 1.9% crash in exports and a 0.5% rise in imports meant that net trade was a drag on growth.

Though, fixed investment cut down by 1.7% in the first quarter, industrial output and agricultural output fell 0.5% and 0.7% respectively, IBGE figures showed.

On the other hand, services activity expanded 0.2%, household spending increased 0.3% and government expenditure rose 0.4%.

State Of The Economy.

The economy is stagnating, but the bias is downward. Growth will be near zero this year,” said Jose Francisco Goncalves, chief economist at Banco Fator in Sao Paulo.

Brazil’s GDP was worth 1.714 trillion reais ($431 billion) in the first quarter, IBGE said.



Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Join Entrepreneurs Family

No spam, only business insights and tips. 

Entrepreneurs Sign Up

Business Registration

Most Popular

Join Entrepreneurs Family

No spam, only business insights and tips. 

Entrepreneurs Sign Up

Related Posts

Financial Management for Entrepreneurs

Financial Management Tips for Entrepreneurs And Business Owners

Effective financial management is a cornerstone for the success of entrepreneurs. As an entrepreneur, managing your finances well can make the difference between thriving and merely surviving in your business. In the Start Your Business in 30 Days programme, we dedicated modules to teaching entrepreneurs about core financial management techniques

Tech Innovations for Entrepreneurs

Tech Innovations for Modern Entrepreneurs To Improve Their Businesses

Staying ahead of the curve is crucial for success in today’s business world. Tech innovations are the driving force behind this progress, transforming how entrepreneurs operate and compete. These tech advancements are not just optional for businesses today; they are essential for survival and growth in a competitive market. Entrepreneurs

Networking for entrepreneurs

The Importance of Networking for Successful Entrepreneurs

Networking for entrepreneurs is a powerful tool that can significantly impact the growth and success of a business. In today’s competitive business environment, building strong connections is more important than ever. That is why we structured the Start Your Business in 30 Days programme in a way that our entrepreneurs

Marketing tips for new entrepreneurs

Marketing Tips for New Entrepreneurs To Boost Their Business

One of the biggest hurdles new entrepreneurs face is effective marketing. Without the right marketing strategies, even the best products or services can go unnoticed. New entrepreneurs need to be equipped with the right marketing tips that will help them stand out. For new businesses to survive, they need great

Scroll to Top

Join Entrepreneurs Family!

Get access to FREE business insights and funding opportunities daily.

Entrepreneurs Sign Up